Cryptocurrency
Bitcoin ETFs and Institutional Adoption: Why It Matters
Share post
In Brief
Learn how institutions are embracing Bitcoin ETFs. Explore the differences between owning Bitcoin via an ETF vs self custody with a wallet like Trust Wallet.
As the cryptocurrency market continues to mature, more banks and financial entities are incorporating crypto ETFs into their investment portfolios. This trend signifies a growing confidence in digital assets. These moves further highlight the unique advantages that Bitcoin ETFs offer.
This article explores why institutions are investing in Bitcoin ETFs, the flexibility these crypto ETFs provide, and the key differences between owning Bitcoin through an ETF versus self-custody with a wallet like Trust Wallet.
Before You Get Started
Before you get started, it’s important to remember that you can buy Bitcoin using Trust Wallet.
Trust Wallet lets you manage and interact with 10M+ crypto assets across 100+ blockchains. Download the latest version of Trust Wallet today.
What is a Bitcoin ETF?
A Bitcoin ETF, or Bitcoin exchange-traded fund, is a financial instrument. A Bitcoin ETF tracks the value of Bitcoin and is traded on traditional stock exchanges. Bitcoin ETFs offer investors a way to gain exposure to Bitcoin, without having to directly purchase and manage the cryptocurrency themselves.
Bitcoin ETFs operate by holding either Bitcoin directly or Bitcoin futures contracts. Their value fluctuates with the price of Bitcoin. Investors can buy and sell shares of Bitcoin ETFs on stock exchanges, just like they would with stocks of traditional companies. This makes it easy for institutional and individual investors to include Bitcoin in their portfolios.
One of the primary advantages of Bitcoin ETFs is their accessibility. Bitcoin ETFs enable investors to add Bitcoin exposure to their portfolios through their existing brokerage accounts, simplifying the investment process. Bitcoin ETFs are also regulated by financial authorities, providing an additional layer of oversight and security.
Institutional Investment in Bitcoin ETFs
As the cryptocurrency market evolves, institutional investment in Bitcoin ETFs has become significant. Financial institutions, including some of the world’s largest banks and institutions, are now recognizing the potential of Bitcoin ETFs as part of their investment strategies. A number of US Bitcoin Spot ETFs were recently approved by the U.S. Securities and Exchange Commission Securities (SEC). Some of these include:
Grayscale Bitcoin Trust (GBTC)
iShares Bitcoin Trust ETF (IBIT)
Invesco Galaxy Bitcoin ETF (BTCO)
Bitwise Bitcoin ETF (BITB)
Why Institutions are Investing in Bitcoin ETFs
Institutions are drawn to Bitcoin ETFs for several reasons:
Regulatory Compliance
Bitcoin ETFs provide a regulated, compliant way to invest in Bitcoin, adhering to the financial standards required by institutions. This regulatory oversight adds a layer of security and legitimacy to the investment.
Simplified Access
Bitcoin ETFs simplify the process of gaining exposure to Bitcoin. Institutions can integrate Bitcoin ETFs into their existing portfolios without needing to manage the complexities associated with direct cryptocurrency holdings, such as wallets and private keys.
Liquidity and Trading
Bitcoin ETFs are traded on traditional stock exchanges, offering high liquidity. This makes it easy for institutions to buy and sell large quantities without significantly affecting the market price, which is crucial for maintaining portfolio balance and liquidity requirements.
What are The Benefits of Crypto ETFs for Institutions?
Investing in crypto ETFs, like a Bitcoin or an Ethereum ETF, offers several benefits for institutions:
Diversification: Crypto ETFs enable institutions to diversify their investment portfolios by adding a new asset class. This can help to spread risk and potentially enhance returns.
Market participation: By investing in a Bitcoin or an Ethereum ETF, institutions can participate in the growing cryptocurrency market without directly handling the digital assets. This reduces operational risk and complexity.
Enhanced trust: The involvement of regulated financial institutions in Bitcoin ETFs adds a sense of credibility, encouraging more investors to participate.
Bitcoin ETFs vs. Self-Custody
When comparing Bitcoin ETFs to Bitcoin self-custody, one of the primary distinctions lies in accessibility, flexibility and ease of use. Bitcoin ETFs offer a seamless way for investors to gain exposure to Bitcoin without needing to venture into the technicalities of blockchain technology or managing a crypto wallet. Bitcoin ETFs are regulated financial products, providing a level of oversight and security that can instill confidence in investors, especially those new to the crypto space. The convenience of trading Bitcoin ETFs through existing brokerage accounts makes them a familiar, straightforward option for many, eliminating the need to handle private keys or worry about the security of a digital wallet.
Self-custody with a crypto wallet, like Trust Wallet, enables investors to maintain full control over their Bitcoin holdings, offering a different set of advantages. By using a crypto wallet like Trust Wallet, investors can directly manage their assets, without relying on third-party intermediaries. This approach enhances security and privacy, as users do not have to share personal information with brokers or financial institutions. Self-custody, however, does come with some minor challenges, such as the need for technical knowledge to securely manage and protect digital assets. Mistakes, like losing private keys, can lead to permanent loss of funds. Without the regulatory protection that ETFs provide, the responsibility for security lies entirely with the investor.
How to Buy Bitcoin Using Trust Wallet
You can buy crypto, including Bitcoin, using Trust Wallet, via our trusted partners. Here’s how:
Select “Buy” from the home screen.
Search for “Bitcoin” or “BTC” and select it.
Choose the currency you want to use, then enter the amount of BTC you want to purchase.
Select the third party provider & payment method you’d like to use.
Select the Buy button and complete the remaining steps.
How to Deposit Bitcoin to Your Trust Wallet Address
In addition to buying BTC using Trust Wallet, you can also deposit BTC from another Bitcoin wallet or from a centralized exchange. Here’s how:
Select “Receive” from the home screen.
Search for “Bitcoin” or “BTC” and select it.
From here you have two options. You can either:
Copy your deposit address and use that on your exchange account or other wallet to send funds to.
Use the “Deposit from exchange” option to deposit crypto from your exchange account.
Remember that in addition to BTC, Trust Wallet lets you manage and interact with 10M+ crypto assets across 100+ blockchains. Download the latest version of Trust Wallet today.
Disclaimer: Content is for informational purposes and not investment advice. Web3 and crypto come with risk. Please do your own research with respect to interacting with any Web3 applications or crypto assets. View our terms of service.
Join the Trust Wallet community on Telegram Follow us on X (formerly Twitter) Instagram Facebook Reddit Warpcast
Note: Any cited numbers, figures, or illustrations are reported at the time of writing, and are subject to change.